Cook County in talks to fix its pension gap

Retirement fund is in better shape than city's or state's, but it still has $5.8 billion shortfall

January 06, 2013|By Hal Dardick, Chicago Tribune reporter

The county pension shortfall has yet to put a squeeze on services, as it has at the state level, but failing to address the issue would only invite program cuts or higher taxes in the future, said County Commissioner Bridget Gainer, D-Chicago, who heads a committee addressing the issue. (E. Jason Wambsgans, Chicago Tribune)

Cook County's pension fund isn't as bad off as its state and Chicago counterparts, but it too will be depleted in coming years if a fix isn't found.

Just a decade ago, the county pension fund was sound, with 90 percent of the cash on hand needed to cover payments it was obligated to make. Now it has only 58 percent of what's needed, leaving a shortfall of $5.8 billion.

"It's clear we are better off than the state and the city, but the bar is pretty low there," said County Board President Toni Preckwinkle.

The county shortfall has yet to put a squeeze on services, as it has at the state level, but failing to address the issue would only invite program cuts or higher taxes in the future, added County Commissioner Bridget Gainer, D-Chicago, who heads a committee addressing the issue.

In an effort to avoid that day of reckoning, Preckwinkle, Gainer and other county officials have been talking to unions for the past year or so about possible solutions. Gainer has taken the unusual step of posting online data and potential changes.

"Preckwinkle and her folks really want to meet and talk over stuff," said Scott Adams, the point man on pensions for American Federation of State, County and Municipal Employees Council 31. "It's painful medicine. ... Discussions are going on."

One proposal published by Gainer's committee would move all county workers and retirees with pension fund-subsidized health insurance into a health care exchange. That would reduce overall costs enough to increase county payments to the pension fund while also reducing the debt by nearly $1.7 billion, according to the plan.

Other aspects include switching annual 3 percent cost-of-living increases from compound interest to simple interest, a 1.54 percentage point increase in the county's pension contribution and 1 percentage point more from employees. Those changes would get the plan 88 percent funded by 2050, county officials contend.

Preckwinkle, however, said she's not committed to any particular plan and won't discuss details while talks with unions are still going on.

"Everything is still on the table — everything," Preckwinkle said. "I think our union leadership has shown themselves to be quite reasonable and understands" that significant changes will have to be made, "because everybody wants the pension program to be sustainable. So that means we're going to have to do some difficult things in the short term if we want to have that long-term sustainability."

Preckwinkle also said the county could end up taking its own agreed-on plan to Springfield for any changes required in state law, just as the Metropolitan Water Reclamation District did last year.

"We've been engaged in talks with our unions for almost a year now around pension issues, and I think what's going to happen is if there's no agreement in Springfield, we will try to come to some agreement with them and bring it to Springfield," she said.